Euronext to maintain repo clearing link with LCH

Euronext has said it does not plan to expand its Italian repo clearing service into other European markets after announcing a decision to develop its Italian clearing house to support its various European equities and derivatives exchanges.

Anthony Attia, Euronext’s global head of primary markets and post-trade, said on Tuesday the exchange group will maintain its current repo clearing relationship with LCH SA, the French arm of the LSE Group clearing house.

Attia told a conference in Milan the Euronext-owned fixed income platform MTS connects to competing clearing services including Euronext’s Italian clearing house CC&G and LCH SA, and “this is part of its strong value proposition”.

Attia said: “MTS is connected to different central counterparties (CCPs) in Europe, and this is not going to change. On clearing of fixed income and repos within Euronext Clearing, today CC&G is very strong at clearing Italian repos thanks to a link with LCH SA.

“This link is very important to us and we intend to keep it and foster it and to continue developing it for Italian repos with LCH SA.”

Euronext announced on Monday its plan to develop CC&G into a pan-European service provider called Euronext Clearing, and to switch the clearing of its equities and derivatives books to the new entity, perhaps as early as 2024.

Speaking on Tuesday, Attia said: “You have heard a lot about our ambition … but we also need to be very realistic, so we have no intention today to expand the clearing of repos in CC&G to non-Italian repos in the next three years. That is not part of our plan.”

Head of Euronext Stéphane Boujnah announced on Monday his decision to switch his clearing from London-based LCH to CC&G, the Italian clearing house he bought earlier this year as part of Euronext’s acquisition of Borsa Italiana.

Speaking on the fringes of a press conference in Milan on Monday, the chief executive and chairman of the managing board of Euronext said his decision to invest in Milan-based clearing house CC&G to make it a pan-European clearer was partly driven by his ambition to expand in derivatives.

Boujnah told Global Investor: “We believe clients want an alternative to Eurex everywhere and not only in the limited number of derivative products we are selling in France and the Netherlands. We want to be a proactive alternative to Eurex. That is a clear ambition and not being dependent on a supplier is going to be an accelerator for us to develop our derivatives strategy.”

The LSE Group responded to the announcement on Monday by pledging its commitment to LCH SA and playing down the revenue impact of the Euronext business leaving LCH.